Bank of America says the euro is still going to plunge to parity with the dollar

Bank of America Merrill Lynch's latest forecast for the euro
suggests it's still going to get a lot weaker against the dollar,
despite a recent uptick.

BAML's researchers are saying the euro will reach parity (where
one euro is equal to one dollar) by the end of the year. That's
despite the fact that the euro's plunge has stalled, and even
reversed a little.

Here's their forecast in Green:

Bank of America Merrill Lynch

The euro slumped from nearly $1.40 during the middle of last year
to $1.0484 on March 15. It's since risen, and currently sits
above $1.08.

Here's Bank of America's justification for another big decline:

Beyond the short-term, we would expect divergence of monetary
policies to continue weighing on the Euro. The ECB has announced
optimistic macro projections, which we see as targets, justifying
QE at least until September 2016, even if data improves further.
Whether EUR/USD weakens well below current levels will depend to
a large extent on whether the market starts expecting QE2 by the
ECB next year. It is too early to make this call, but our
economists believe that ECB QE 2 is more likely than not based on
their inflation projections.

The basic thesis is that the Fed will be hiking US interest rates
in the months and years ahead, which will drive demand for
dollars, since investors will be able to make more on their
dollar-denominated investments. The opposite is true for Europe,
where the European Central Bank's QE programme suggests it's
trying to keep interest rates as low as possible for at least 18
months.

The idea that the euro will drop considerably is contrary
to HSBC's view on the recent dollar rally — their researchers
say this run of strength already outstripped the historically
average average size of a dollar rally. That would suggest the US
currency won't get much stronger against the euro from here on
out.